When one member of a couple moves to a nursing home, it is generally assumed that spouse will be the first to die. But what happens if a Medicaid recipient's spouse dies first? It’s important to plan for that possibility, otherwise it could impact the nursing home resident's assets and eligibility for Medicaid.
In order to be eligible for Medicaid benefits in most states, a nursing home resident may have no more than $2,000 in assets. The Medicaid applicant's spouse, the community spouse, can keep more assets. In general, using 2013 standards, the community spouse may keep one-half of the couple's total countable assets up to a maximum of $115,920, depending on the state. Often when one spouse seeks to qualify for Medicaid, he or she transfers assets to the community spouse.
The death of a Medicaid recipient's spouse can affect the amount of assets the Medicaid recipient has, and therefore his or her Medicaid eligibility. A common example involves the community spouse leaving his or her estate to the spouse in a nursing home and receiving Medicaid. The additional assets will make that spouse ineligible for Medicaid. Even if the community spouse's will did not leave anything to the other spouse most states allow a spouse to claim a share of the estate. Medicaid can assess a penalty even if the surviving spouse does not claim his share.
The couple's house can also become a problem. Most spouses own property jointly. If the community spouse dies, the Medicaid recipient will own the house. Depending on the state, the nursing home resident may have to prove either an intention to return home or a likelihood of returning home in order for the house not to count as an asset. If the resident sells the house, the proceeds from the sale will make the resident ineligible for Medicaid.
To prevent a community spouse's death from impacting the institutionalized spouse’s Medicaid eligibility, it is important that the community spouse update his or her estate plan. There are steps the community spouse can take to protect the spouse in the nursing home, including setting up a trust. That’s something with which we can help.